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Projects

Carmacks

Economics

Economics is based on Preliminary Economic Assessment news released Oct 12, 2016. The PEA supersedes the Preliminary Economic Assessment dated May 2014, by the new PEA that was filed on Sedar November 25, 2016. The new technical report in progress is based on an agitated tank leach process plan and is substantially different than the previous heap leach plan. The new mine and leach plan includes the recovery of both copper and gold and silver.

Financial Analysis

The October 2016 Preliminary Economic Assessment is based on a copper price of US$2.50/lb, US$1300/z gold and US$17.50/oz silver.

Preliminary Economic Assessment October 12, 2016

Copper (US$/lb)

Base Case
US$2.50

Gold (US$/oz)

$1300

Silver (US$/oz)

$17.50

Foreign Exchange (CAD$100-US$0.78)

0.78

After Tax

Pre-tax

NPV (0%)
(CAD$ millions)

$75.2

$118.2

NPV (8%)
(CAD$ millions)

$-11.4

$11.9

IRR

6.6

9.4

Payback (Pre Tax)

5 years



Production Metrics

Production and Processing Metrics
LOM Average Annual Copper Productions (lbs.) 30M
LOM Average Copper Grade (%) 0.977
LOM Average Gold Grade (g/t) 0.435
LOM Average Silver Grade (g/t) 4.34
LOM Strip Ratio 5.1:1



Initial Capital Cost

Initial Capital Cost CAD$
Process, Infrastructure, Project Contingency $214.71 million
Sustaining Capital $20.5 million
Contingency $28.4 million
TOTAL $263.6 million

Operating Costs

Life of Mine Operating Costs Total Cost C$ C$ per tonne ore
Mining $183.5 million $15.73
Processing $112.2 million $23.27
General and Administration $38 million $6.45
TOTAL $336.9 million $45.45


LOM Production Metrics Life of Mine
Operating Life (years) 7+
Ore Throughput (t/d) 4,860
Copper Production (M lb/y) 30
Gold Production (oz/y) 19,500
Silver Production (oz/y) 21,600
Strip Ratio   5.1:1
Copper Recovery (%) 86
Cash Costs US$/lb Cu after deducting Au & Ag credits 1.08

Notes: Oct 12, 2016, announced Preliminary Economic Assessment (PEA) that changes the leach plan for oxide copper mineralization and provides for gold and silver leach following completion of the copper leach in agitated tank leach. The PEA evaluation does not include sulphide mineral resources. The PEA was prepared by JDS Energy and Mining In.c with Independent Qualified Persons; Giles Arseneau for Mineral Resource estimation, Golder Associates Ltd. for geotechnical, Independent Mining Consultants for mining plan and Dr. David Dreisinger for metallurgical and processing. The new PEA is based on the mineral resources for zones 1,4 and 7 and do not include the new mineral resources filed March 10, 2016. The oxide mineral resource forming the basis of the economic assessment includes Inferred 90,000 tonnes comprising approximately 0.75% of all mineral resources. There is no certainty that additional drilling will confirm the conversion of Inferred resources to Measured and Indicated categories.

Notes: The technical report entitled "Preliminary Economic Assessment of Copper, Gold, and Silver Recovery" (the "news released October 12, 2016") is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the PEA will be realized. Refer to the November 2016 PEA that was filed on Sedar November 25, 2016 .

Sensitivity

With the increase of copper price, it is prudent to update Project Economics. In October 2017, copper price has ranged generally from US $3.10 to US $3.20. For purpose of updating project economic cooper is priced as US$3.00/lb and unchanged gold at US $1300/oz and unchanged silver at US $17.50/oz.

Notes to Table:

The above estimates are forward-looking and demonstrate sensitivity to specific project assumptions. Some of the estimates are not NI 43-101 and investors should rely on the PEA dated October 12, 2016.

a. Base case as documented in JDS Energy and Mining. 2016. NI 43-101 Preliminary Economic Assessment Technical report on the Carmacks Project, Yukon, Canada

b. Goldman Sachs 12-month copper price forecast (US$7,050/tonne; US$3.20/lb), reported in South China Morning Post (Oct 25, 2017) and CNBC Market Insider (Oct 24, 2017). This copper price is within the range of the sensitivity analysis of the 2016 PEA.